Intellectual Property Magazine: Mergers, metrics and the AIA

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Intellectual Property Magazine: Mergers, metrics and the AIA

Originally Published in Intellectual Property Magazine | March 5, 2015 | By Paul Mandell

A survey of IP counsel working in life sciences has revealed the three biggest challenges they face. Paul Mandell offers some solutions…

The chief intellectual property (IP) counsel of today’s global life science companies have more challenges to tackle than ever before. The protection of IP in the pharmaceutical and biotechnology industries is vital not only to corporate success, but also to the innovations these companies bring to the world. Chief IP counsel in life sciences must understand the ever-changing environment in which they are working, staying on top of the latest relevant rules and adjusting their strategies accordingly.

In the January 2015 IP Pharmaceutical & Biotechnology Data Survey, Consero Group assessed the perspectives of these counsel, with the goal of identifying their most significant opportunities and obstacles. Some interesting themes arose within the survey results, several of which are discussed in more detail below.

Significant findings

A majority of chief IP counsel in the life sciences are pursuing M&A to support R&D

While 83% of chief IP counsel reported that R&D is performed in house, 78% also indicated that they are pursuing merger and acquisition (M&A) opportunities in order to enhance their research and development pipelines. The percentage of chief IP counsel pursuing M&A increased significantly from the figure of 55% in Consero’s 2013 IP Pharmaceutical & Biotechnology Survey.

The America Invents Act has changed patent process for over 75% of chief IP officers

As the two-year mark approaches since the America Invents Act (AIA) went into effect, 78% of chief IP officers say the AIA has altered their approach to the patent process. The percentage who reported the AIA – the federal statute that changed the patent process from a ‘first-to-invent’ system to a ‘first-to-file’ system – has changed their in-house approach to the patent process has increased over time. When the same question was asked in a 2013 survey, just 59% of chief IP counsel reported having altered their approach to obtaining patents. In addition, 68% of respondents said the AIA has made the process for Post-Grant Review and Inter Partes Review (IPR) more complex.

Partnerships and outside counsel widely used and provide sufficient value

Eighty percent of those surveyed have outside help to perform patentability analyses, and the same percentage have licensing agreements in place with institutions of higher learning. In relation to working with their outside IP counsel, only 34% of chief IP counsel use fixed-fee arrangements for billing purposes. Partnerships between surveyed counsel and their outside counsel seem to be positive, as 85% of those surveyed believe their outside counsel provide sufficient value for the cost.

Metrics are not widely used to assess value of company IP

A total of 78% of chief IP counsel reported that their function is viewed as a strategic partner of the business. With respect to assessing the worth of corporate IP, 72% of chief IP counsel do not believe metrics provide a useful and accurate measure of the value of IP to the business. On a related note, only 30% of those surveyed employ metrics to assess the value that the company’s IP generates.

Analysis and implications

The survey results detailed above provide valuable insight that yield practical business applications for chief IP counsel in the life sciences. Analysis of these survey findings points towards several areas for action.

1. Chief IP counsel must take the lead in pursuing partnership and M&A opportunities

Research and development is crucial to the success of pharmaceutical and biotechnology companies, as the discovery of new processes, devices and compounds often determines whether the company will continue to exist. Amid increasing global competition, chief IP counsel will need to seek out new ways to provide greater value to the organisation.

In recent years, the numbers of surveyed chief IP counsel reporting the pursuit of M&A opportunities in order to enhance R&D pipelines has increased. This number should continue to rise, as chief IP counsel must play an active role in establishing partnerships and exploring potential acquisitions, working closely with their company’s M&A teams. Outside help to perform patentability analyses, as well as licensing agreements with universities, also play important roles.

Gwilym Attwell, an intellectual property lawyer and a Principal in Fish & Richardson’s Delaware office, provided his perspective on strategic opportunities for Chief IP officers:

“The in-house IP function at life sciences companies is increasingly critical for the continuing success and even survival of their companies.

With increasingly sophisticated competitors, changes to what actually can be patented, and new ways by which their patents can be challenged, in-house counsel more than ever are having to keep up with emerging issues and aggressively develop future strategies, often in the face of shrinking internal budgets. Accordingly, strategic relationships with others, both internally and with outside law firms, are more important than ever.”

2. Chief IP counsel must keep abreast of ongoing developments related to the America Invents Act

As more time has passed since the AIA went into effect, an increasing percentage of chief IP counsel are reporting that the AIA has altered their approach to the patent process, as well as that the AIA has made the patent process increasingly complex. In addition, though recent judicial decisions have provided greater clarity around the AIA, a large majority reports that the AIA has made the processes for Post-Grant Review and IPR increasingly complex.

Given the complicated landscape yielded by the AIA, Attwell points towards the need for a team approach to the new procedures, involving patent prosecutors and other practitioners with specialised skill sets:

“Although previous procedures, including Inter Partes Reexamination and Ex Parte Reexamination, existed as means by which to challenge issued patents, the new post-grant procedures, such as IPR, Post-Grant Review, and Covered Business Method (CBM) patent review, are much more complex and can present many traps for the unwary.

“The new procedures are much closer to traditional litigation and involve trials, not patent examinations, and thus require a team approach including practitioners with specialised skill sets including patent prosecutors experienced in both post-grant proceedings and in the specific technology involved; patent litigators used to taking and defending depositions; and Federal Circuit specialists ensuring the record is properly set for subsequent appeals.”

As Attwell advocates, chief IP counsel should take a collaborative approach to the new procedures. He further highlights the ongoing challenges – and opportunities – of new post-grant procedures:

“These new post-grant procedures – most notably IPR – represent both a significant source of risk and opportunity for companies in the life sciences. While several life sciences companies are already immersed in IPR procedures in which their own patents – often their crown jewels – are being challenged, other companies are using IPR as an offensive tool to remove potential freedom to operate barriers. The latest statistics from the US Patent & Trademark Office show that the relative number of patents being challenged using Inter Partes Review in the Bio/Pharma space is steadily increasing.

“As recently as August 2014, for example, 5.2% of patents challenged using IPR were in the bio/pharma space. As of January 2015, this figure had grown to 8.9%. Interestingly, a few new types of non-traditional players have emerged in the IPR field. These new players are not the typical competitors in the field like branded or generic companies, but instead include public interest groups.

“Other types of post-grant procedures are also relevant to life sciences companies. For example, although their initial filings appeared to have been unsuccessful – in that the PTAB declined to institute the CBM trial – generic companies have attempted to invalidate certain Jazz Pharmaceuticals patents using the CBM patent review procedures.”

3. Chief IP counsel should employ greater use of metrics

Metrics can provide important insight into the value of the portfolio, as well as the efficiency of the IP team. Currently, only 30% of chief IP counsel use metrics to assess the value generated by the company’s IP. An even smaller number, 28%, say metrics provide a useful and accurate measure of the value of IP to the business.

Chief IP counsel should give more thought to the design and use of metrics, as they can prove highly useful.

Metrics can be used, for instance, to demonstrate the value of the IP function and its role as a strategic partner to the business. While the survey found that 78% of chief IP counsel reported their function is viewed as a strategic partner to the business, that number has decreased in comparison to the 2013 survey. Through increasing use of metrics, chief IP counsel can demonstrate the value of their function.


Paul Mandell is a founder and the CEO of Consero Group, an international leader in the development of invitation-only events for senior executives.